Hostelworld, the hostel-booking group that targets millennial and Gen-Z backpackers, said growth in transactions was affected as the conflict in the Gulf escalated during the second quarter of the year.
While transaction volumes rose by 1 per cent to 3.8 million for the six months through June, the company said that this was about three percentage points lower than what would otherwise have been expected in the absence of the crisis. The effect was most felt in Asia and Oceania, with demand in Europe and North America proving “more resilient”.
However, the group’s net revenues rose 12 per cent to €52.2 million, driven partly by the launch last summer of its Elevate marketplace tool to let hostel operators manage inventory and visibility by paying a marginally higher commission rate.
Direct marketing spend as a percentage of revenue dipped to 49 per cent from 51 per cent for the year-earlier period, which also helped push earnings before interest, tax, depreciation and amortisation (Ebitda) up 11 per cent to €8.2 million, the company said on Thursday.
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The group reiterated its full-year guidance, which is for “low double-digit” percentage revenue and an Ebitda margin greater than 20 per cent.
“Our full-year guidance assumes that the disruption associated with the Middle East conflict eases through the second half and broader trading conditions normalise, with the contribution from our growth initiatives increasing as the year progresses,” said chief executive Gary Morrison.
“The group continues to monitor the ongoing geopolitical environment but on the basis of the above, we reiterate our guidance for the full year.”
The US and Iran have threatened to reignite their conflict this week after the most extensive exchange of fire since a ceasefire and interim deal was agreed last month. The US military struck Iran in recent days and Tehran retaliated against US allies in the Persian Gulf, raising fears that the tit-for-tat attacks may derail talks on a permanent peace deal.
But while US president Donald Trump declared the ceasefire “over” on Wednesday, he subsequently said he would let negotiators continue talks and that he didn’t think the war would resume.
Goodbody stockbrokers analyst Patrick O’Donnell said that Hostelworld “performed well” in the first half of the year, given the underlying uncertainties in the Middle East.
Hostelworld acquired a US event discovery platform called OccasionGenius, which provides city-by-city guides to events and experiences, late last year for $12 million (€10.5 million). It said on Thursday that integration of the deal was “on track” with event discovery set to go-live in the coming months across Hostelworld’s own platform.
“We remain bullish on significant addressable market opportunity that Hostelworld is enabling with the ongoing delivery of its strategy,” said O’Donnell.
Shares in Hostelworld have fallen about 13 per cent so far this year in London, where they are mostly traded.
